I spoke with Delaware's Governor Jack Markell last night at an event in Palo Alto, California that was sponsored by the Environmental Business Cluster and Alloy Ventures.
Fuel cell maker Bloom Energy may open a factory on the site of an abandoned Chrysler auto factory in Delaware and will manufacture and sell fuel cells in that state.
Governors like Markell are motivated to bring business and jobs to their state. The new Bloom factory has the potential to add 1,500 new jobs -- and that's a big number in a state with a population of about 900,000. It's appropriate for the governor to be excited about the prospect.
Part of the deal in getting the factory in the state was that Delmarva, the utility that serves Delaware, would purchase 30 megawatts' worth of fuel cells. That's about 300 units, an enormous number for Bloom, which has shipped about 100 units since its founding. Bloom just raised another $150 million from its investors, bringing its VC total to more than $600 million.
This docket before the PSC states that the number could reach 50 megawatts and that construction needs to start in 2011 in order to garner the federal cash grant.
The Governor and his staff member told me that the cost to each ratepayer would be roughly $1 per year. Delmarva has about 300,000 electric customers.
Patrick McCullar, CEO of the Delaware Municipal Electric Corporation, said in an article in Delaware Online this week that the Bloom deal is one he couldn't sell to his ratepayers. He added, “We would not enter into any contract that had an uncertain cost component to our customers," noting, “When someone doesn’t want to commit to a fixed cost, that’s a red flag."
McCullar said he foresees an uphill climb for Bloom’s deal with Delmarva in front of the Public Service Commission. “They usually like to deal with a finite number,” he said in the article. The hearing is currently scheduled for October 18.
Markell has pushed Delaware lawmakers to change the state code to allow power from fuel-cells to count towards its 25-percent-by-2025 renewable portfolio standard (RPS). Critics object to the watering down of the term "renewables" to include fuel cells powered by natural gas -- which is a fossil fuel and can be obtained by the controversial method of hydraulic fracking. Critics also maintain that including fuel cells in the RPS will inhibit the use of solar and wind power in the state.
Bloom's fuel cells convert gas to electricity on-site and can be more efficient than generating electricity from gas at a central power plant. Fuel cells also produce potentially lower emissions.
(Here's some discussion of Bloom's SOFC design versus a cogeneration approach from a white paper by a cogen expert.)
Cogeneration can achieve better CO2 reductions than the Bloom Energy fuel cell when operating on the same type of fuel, according to Bob Spitzka, President of Water & Energy Management (WEM) of Danville, California, in a white paper he's written with colleague James Hall. Both are licensed Professional Engineers in northern California who have collaborated on the feasibility and design of nearly 100 cogeneration projects in California and Hawaii during the past 36 years.
When you splash on the scene like the Kleiner Perkins and NEA-funded Bloom Energy, making bold pronouncements about power costs and energy security, one has to expect a bit of a spotlight to continue to shine on the hype. Especially when you're working on a 150-year-old technology that has yet to yield a profitable fuel cell company.
WEM's paper presents a comparison of CO2 emission reductions derived from the installation of a 100-kilowatt Bloom Energy ES-5000 fuel cell and a 100-kilowatt natural gas fired cogeneration system (cogen). Thousands of cogen systems have been installed over the last few decades and are in use across the world, providing heat and electricity to thousands of facilities.
According to Spitzka, cogen, also described as combined heat and power (CHP) or distributed generation (DG), is not perceived by the general public as a system that can decrease CO2 emissions.
Instead, in his estimation, enormous amounts of public funds are being allocated for grants, subsidies, and special financing for installing Bloom Boxes because the Solid Oxide Fuel Cells are ostensibly "green" with a low-carbon footprint.
Spitzka concedes that while the application of the Bloom unit can provide benefits to facilities where the use of thermal energy (hot water) is minimal or nonexistent, there are many facilities, such as hospitals, schools, research facilities, factories, senior residences, etc., that use hot water on a continual basis where cogen can achieve better CO2 reductions than the Bloom Box.
Background on Cogeneration
The cogen process involves using natural gas to power an engine coupled to an electrical generator to supply some or all of the facility’s power while capturing the thermal energy from the engine and using it to preheat the facility's hot water boiler. This reduces natural gas consumed in the facility’s boiler and reduces operating cost and CO2 emissions.
The cogen process results in overall thermal efficiencies of over 80 percent; most utility power plants are around 35 percent efficient, according to the author. The cost of cogen systems is estimated to be $3,000 per installed kilowatt versus Bloom at more than $8,000 before subsidies. (Editor's note: Bloom competitors Panasonic, ClearEdge Power and Ceres Power have made cogen heat/electricity fuel cells that hit high efficiency levels. Bloom maximizes electricity and minimizes heat because electricity is a higher-value form of energy, it says. The small amounts of heat go toward running the fuel cell itself.)
System Performance Comparisons
The white paper performs a comparison between installing a single 100-kilowatt Bloom unit and a 100-kilowatt cogen system, both operating on natural gas at a facility currently purchasing its electricity and natural gas for its boilers from Pacific Gas & Electric (PG&E), and evaluates each system’s effect on net site CO2 emissions.
One of the benefits that Bloom cites in its literature is that its unit can provide a “carbon-neutral” generation solution when operating on renewable fuels such as biogas. While this claim is valid, Cogen has the identical ability to operate on a biogas. However, Spitzka's analysis looks at the operation of each system using the same natural gas currently being purchased for the facility’s boilers.
The following table is a summary of the comparison between the Bloom unit and a Cogen unit, each rated at 100 kilowatts and operating for 90 percent of the year (7884 hours/year).
Site CO2 Emissions Comparison Summary
|Electrical Output, kW||100||100|
|Thermal Output, therms/hr.||0.0||7.0|
|Fuel Input, therms/hr.||6.61||12.8|
Fuel Credit for Using Waste Heat to Reduce Site
Boiler Natural Gas Usage, therms/hr. *
|Net Site Fuel Use, Therms/hr.||6.61||3.47|
|Operating Hours per year||7,884||7,884|
|Net Change in CO2 Site Emissions (Tons per year)||98.2 (increase)||(22.8) (reduction)|
|100 kW System Cost||$800,000||$300,000|
* Avoided Site Boiler Fuel = 7.0 therms/hr. / 75 percent boiler Eff. = 9.33 therms/hr.
Although the Bloom unit produces significantly less CO2 compared to cogen in the production of electricity only, the significant reduction in boiler site CO2 emissions due to cogen’s thermal energy output results in a net decrease in CO2 emissions for cogen, as compared to a net increase for the Bloom unit.
According to Spitzka, in "many facilities, the application of cogen will reduce site CO2 emissions, while the Bloom system, in geographic areas such as California, may actually increase site CO2 emissions. These conclusions are unknown to many politicians and the media, so they enthusiastically push the Bloom technology without acknowledging that the monetary cost and performance of the Bloom system may not be the sole technology worthy of public support."
Spitzka writes, "The American people deserve to have their public funds spent on projects that have been properly vetted by independent and technically competent engineers, not by media hype. Let’s invest in the most effective technology available to maximize cost and environmental benefits for the user before all of the public money is all spent."
A colleague, also with experience in this business, said, "I think [WEM is] being a little unfair to Bloom insofar as cogen purposefully tries to use the waste heat for 'process.' It would be better to compare a 100-kW system to a Bloom system that added the necessary 'space heat' to whatever the kWh output is."
The white paper from WEM goes into far greater detail on the calculations performed to reach these numbers. We've asked Bloom to comment on these findings, and they have not responded.